Snap Color on Quarter
- Stifel lowers their SNAP tgt to $18 from $22, reiterates Buy. Firm notes that Snap's 2Q results were slightly below consensus expectations, with revenue ~2% below Street estimates and net DAU additions of +7mm q/q versus consensus forecasts for +9mm q/q. They believe a primary driver of Snap's light 2Q revenue was its ad buying mix shifting significantly to the recently launched API / self-serve platforms, which pressured ad pricing on 2Q placements but this should benefit the platform through broadened advertiser demand over time. User growth remains healthy, particularly in the key U.S. and Canada markets, even in the face of heightened competitive concerns. They are lowering their expectations for revenue growth in 2017 as pricing presents a near-term headwind; however, they continue to recommend the company as SNAP shares could offer compelling upside when monetization reaches an inflection point.
- RBC lowers their SNAP tgt to $20 from $31, reiterates Outperform. Firm notes that Q2 Revenue, EBITDA, and DAUs fell short of Street expectations - Revenue by 3%, EBITDA by 7%, and Net DAU's by 2MM. While results are weaker than expectations, they still argue against results altering their long-term thesis. Way too early with much of the market still up for grabs.
- Needham reiterates Underperform. Firm notes that SNAP missed their estimates. Daily Active Users (DAUs) reached 173mm, up 7mm and 4% q/q. ARPU grew 17% q/q to $1.05. They felt there were several things that were different on the 2Q17 call compared to the 1Q17 call; a) Evan Spiegel was much more engaged with Wall Street (positive); b) SNAP's messaging was about being the best place for advertisers to reach young people (15-25) on smartphones (positive)- dearth of "camera company" language; c) SNAP is introducing new products that are harder to replicate by competitors (positive); d) SNAP's new auction prices are down 80% for app installs (negative), which is attracting new advertisers to try SNAP (positive); and e) SNAP bought Placed in order to prove that SNAP ads get users to purchase goods in the real world (we'll see if this works out for SNAP).
- Pivotal reiterates $9 tgt, reiterates Sell. Firm notes that Snap reported decent 2Q17 results, with relatively in-line revenues vs. the forecast. Costs were higher than we expected, but then so too was usage, coinciding with the company's Map product launch. Commentary around like-for-like advertiser spending increases, new ad product launches and geographic expansion can also be viewed favorably. However, our overall financial model remains relatively unchanged post these results.
- Monnes Crespi Hardt downgrades to Neutral from Buy. Firm notes that in short, the thesis has changed. What's unfortunate is that despite all the media frenzy over Facebook's (FB/Neutral) ‘Snap-killing' features, they see the slower-than-expected ramp in revenue as largely self-inflicted. Their initial favorable outlook was predicated on: (1) better pulse on mobile content experiences versus peers and, in turn, opportunities to aggressively invest and capitalize; (2) steep trajectory in ARPU as growth is accessed from the most affluent of markets; and (3) rapid iterations on the product front. What's happened is that the priorities don't seem to be fully aligned with the company's strengths.